What are the pros and cons of a commissioned based job vs hourly vs salary?

2015-08-31T16:04:32-04:00

Response by SGT James Vidito made Aug 31 at 2015 4:06 PM

2015-08-31T16:06:00-04:00

The pros: You get paid what you're worth. The cons: You get paid what you're worth.

Response by SGT Jerrold Pesz made Aug 31 at 2015 4:33 PM

2015-08-31T16:33:03-04:00

The main pro is that if you are good you can usually make far more money on a commissioned job. The negative is that you can starve if you are not good at whatever you are doing. Although I was always in management I worked almost my entire working life being paid some form of commission. Usually for a manager it is based on profit or total sales. If you improve profit and/or increase sales you make more money. If you don't you get fired so you don't have to worry about it. Likewise most of my employees were paid on commission. I have seen cases where one person would make many times what others were making at the same job. Please don't think that sales jobs are the only commissioned jobs. Many technician type jobs are too. Often the really good ones would not take a salaried or hourly job because it limited their income.

Response by MCPO Roger Collins made Aug 31 at 2015 4:33 PM

2015-08-31T16:33:20-04:00

Confidence is the basic difference, if you have a choice. My experience in sales was you negotiate a best salary that you can live on and get commission to boost it up. Does require confidence in yourself. Personally, I would not go with salary alone, unless it was quite high. Hourly normally isn't used by professionals and management (don't get upset anyone, its just my opinion).

Response by LCDR Private RallyPoint Member made Aug 31 at 2015 4:35 PM

2015-08-31T16:35:25-04:00

Commission based careers are essentially "grinders" for low overhead "shotgun" approaches to sales. No serious company looking for a long-term sales professional goes 100% commission...though you're not truly "in sales" until you're waiting on that percentage each quarter ;)

Response by LTC Kevin B. made Aug 31 at 2015 5:05 PM

2015-08-31T17:05:31-04:00

Regarding earnings:

Pro? Higher ceiling.
Con? Lower floor.

Response by PO3 Jeromy Aldridge made Aug 31 at 2015 5:08 PM

2015-08-31T17:08:11-04:00

Pros: No Cap in income, and you may receive residual commissions, vs Salary where it is capped regardless of your performance.
Cons: Nothing is Guaranteed. but neither is having a career that pays a salary. Layoffs have a tendency to happen quite often on salaried based professionals, even the best will be the victims of "Projected drop in revenue"
Pros: You can work 20 hours a week and make a real good living if you prioritize on a commissioned base position versus working 50 - 60 and making the same or less
Cons: You can 80 hours a week and not make anything versus having a guaranteed.
Pros: Commissioned based usually has flexibility in schedules that allow you to do things that are important to you, like being able to take off to see your sons/daughters event. Salaried allows you to take PTO our UTO (Paid Time Off, Unpaid Time Off)

Response by Capt Seid Waddell made Aug 31 at 2015 5:21 PM

2015-08-31T17:21:24-04:00

Hourly jobs have security as well as a low ceiling; you can only make a set income based upon how many hours you put in, and you generally have little flexibility on determining your schedule. Generally the hours are set and you are paid overtime for work beyond those set hours.

Salary is usually done for the company's benefit; generally you put in as many hours as it takes to get the job done - which can be considerably more than the usual hourly worker. Salaried workers generally get higher pay (not counting overtime) and more flexibility in setting your own schedule to fit your needs as well as the company's needs.

Commission work is best for the company and for the top performers. The company only pays for value received, and the top performers can make far more than either salaried or hourly workers. And they can starve in lean times. It is easy for commissioned workers to change employers like a suit of clothes if they find better opportunities elsewhere. There is little loyalty required (or given) on the part of either the company or the worker; both are in it for their own best interests.

Some insurance companies hire ex-military on a commission basis to sell to all of their friends and then throw them away when they run dry.

The best system is the one with which you are most satisfied.

Response by COL Mikel J. Burroughs made Aug 31 at 2015 7:09 PM

2015-08-31T19:09:48-04:00

MSG Daniel Hermany I would try to find a combination of both. That is the great thing about the industry that I've been in over the last 36 years. The Collection Industry and Debt Buying Industry (there is a base and ther is commission), so you get paid for exceptional efforts, but yo don't starve to death while youare working very hard.. I've never had just a salaried position or strictly commissioned postion. Even as the head of organizations in these industries the "El Presidente" gets an annula commission based on the overall performance of the organization and its profitability! It's always been a combination of both. There are many more industries with both and that is what I would target. Just my humble opinion!

Response by SrA Private RallyPoint Member made Sep 1 at 2015 9:35 AM

2015-09-01T09:35:41-04:00

I've worked hourly & salary sales; hourly is nice cause you get paid for every minute you're working & you're still able to collect overtime. Salary is also nice cause you might only work 38 hours but still get paid 40, however that's rare. When I was salary I worked 6 10's, and of course you only get paid for the standard 40 hours. But there are typically bonuses involved in both depending on the company you work for so those usually help even out the gaps.

Response by SFC Bruce Pettengill made Sep 1 at 2015 11:56 AM

2015-09-01T11:56:13-04:00

Do not, repeat do not, I say again do not take a straight commission position unless you have been in the position for a least a year, or have a residual commission that is already paying at least a 3rd of your income. This is not to say there are not some good companies to work for, but it has been my experiance that the commission only jobs do not fill your gas tank and if you can't go make face to face sales calls, you can't earn money. all to often people think that they can start out on the phone, but that in most cases is a failure because its hard to see the emotion on someones face over the telephone. If a company is worth working for there will be a base income (with a guareentee commission) that can get you out and moving. when you are driving around and being active in the sales territory you will find stuff by accident.

Response by CW3 Kevin Storm made Sep 1 at 2015 12:51 PM

2015-09-01T12:51:08-04:00

Commissioned, sales related, you may go hungry this week, you may eat steak and caviar next week. Hourly, you get paid by the hour, you get overtime or comp time for overtime in most jobs (Emergency Workers are an exception to Federal Labor Laws). Salary, you get a fixed amount of money no matter how many hours you work, normally you get shafted in these jobs as you exceed the normal 40 hour a week. Overtime is not always compensated, working weekends may be common, on call not uncommon, normally you are in a management position of some kind.

Response by CPT Jack Durish made Sep 1 at 2015 10:48 PM

2015-09-01T22:48:56-04:00

Sales drive every commercial organization's success. Come to think of it, the same is true in the military isn't it? Just how fat would a military budget be if someone didn't sell defense programs to Congress? That being said, I have never heard of anyone becoming wealthy on a salary. On the other hand I have known many who became wealthy on commissioned sales. Interestingly, the most successful were fired because one day some idiot in management thought to himself how much more the company would profit if they didn't have to pay fat commissions to the sales force. Of course, they met with predictable results. There's a story famous in advertising circles about old man Wrigley who was once riding a train from San Francisco to Los Angeles. He had completed his chores and was about to enjoy the passing view when his private secretary asked, "Mr Wriggly, you are making a vast fortune. You sell more chewing gum than all of your competitors combined. Why don't you stop investing so much in advertising and keep that money as profit." Wriggly responded by asking, "How fast is this training going?"

"About 60 mph."

"Does the railroad want it to go faster?"

"No, sir"

"Then why don't they remove the locomotive and save all that money they're spending on fuel?"

Fortunately, a successful salesman can always find another gig when their employer decides to remove the locomotive...

Response by SPC David Hannaman made Sep 1 at 2015 11:40 PM

2015-09-01T23:40:47-04:00

Commission: if it's (the job) good and you're a good sales guy is limitless income potential... But if it isn't or you aren't you'll starve.

Hourly: you work x hours, you get paid for x hours, usually pays less than salary, and in a down economy hours might get cut.

Salary: usually pays more and theoretically if there isn't work to do you go home instead of trying to "look busy".

In practice though I always have work to do and usually end up 50-60 hours a week, sometimes up to 80 but seldom less than 40.

Hope that helps

Response by SSgt Private RallyPoint Member made Sep 2 at 2015 5:14 PM

2015-09-02T17:14:46-04:00

Most salaried employment is exempt from Overtime payout laws (at least in this state), but you still get paid regardless. Hourly rates are only paid out if you work them. Commissions are only paid out if you actually sell something. If you are a AC salesman in Alaska during December you might be SOL.

Response by CDR Michael Goldschmidt made Sep 2 at 2015 5:44 PM

2015-09-02T17:44:31-04:00

Hourly, you don't actually have to produce, so it's rarely value for value, the only ethical exchange between people. On commission, you earn what you produce.

Response by SGT Rick Ash made Sep 3 at 2015 12:50 PM

2015-09-03T12:50:18-04:00

If you are selling a service or product that is awesome then a commission only pay could be great. If hundreds of thousands of people are selling the same thing then you will have to sell at lowered prices which will resort in a lower commission. Many companies will pay a "draw" type salary which will be taken out of your commission but insures you get paid something every week. Make sure to ask about a split type pay plan, it has always worked out for me over my 31 years in sales.

Response by SSG Toryn Green made Sep 3 at 2015 9:19 PM

2015-09-03T21:19:58-04:00

I currently work in a position that is a mixture. We have a base salary plus weekly incentive pay. For most of us, the incentive pay is the biggest chunk of our check, however there is still that guaranteed income. I would never take a straight commission job as it doesn't provide a consistent steady flow of income that is guaranteed. Hourly jobs allow for a decent paycheck depending on the number of hours worked. For me, I like the mixture. I know every week I will get X amount of dollars, I budget off that and any incentive I receive is savings, vacation fund, investments.